This update will be shorter than usual but I wanted to reach out to you and give you my thoughts.
When historians look back on this day, I am confident that it will be viewed as the first day of what the Wall Street Journal calls the "the dumbest trade war in history". This will undoubtedly be damaging to the economies of both Canada and the US and the only question is, how long will it last? I wish I knew the answer to that. What I am absolutely sure of is that it will not last indefinitely because it can’t. That is why I am looking past the current turmoil and thinking about how we come out on the other side. I will remind you that I recently derisked your portfolio in anticipation of this volatility and it is helping. I am currently monitoring the overall investing landscape with the goal of making sure we are as well positioned as possible as we come out of this. I remain convinced that there will be opportunities to capitalize on.
In the meantime, I am prepared for this trade war to end quickly and I am prepared for it to last a long time. The different scenarios will likely require different responses from an investment perspective. If you are interested in delving deeper into this issue, I am attaching a link to an RBC resource called the “Trade Hub” which offers insights into numerous issues that the Canadian economy will face in the coming weeks and months. My general advice, though, is to not spend too much time watching and listening to all the news and particularly the senseless rhetoric from the US administration. I expect that Americans will begin to see the effects of this very soon. My sense is when the first car manufacturer in Detroit says they are cutting shifts or laying off workers because of the tariffs, the pressure will immediately turn back to the White House. And it will be very interesting to see the reaction of the average American when they start paying higher prices for everything including gas.
As always, don’t hesitate to reach out if you have any questions.
